The Central Statistical Organisation (CSO) came out with the first advance estimates on gross domestic product (GDP) for the current fiscal on January 6, 2017 – almost a month before the standard release date of February 7 – to facilitate advancement of the general Union Budget presentation to the beginning of February.
CSO has estimated the real GDP growth for fiscal 2017 to fall to 7.1% from 7.6% in fiscal 2016. CRISIL Research believes that advance estimates by CSO are likely to have an upward bias, especially in terms of government consumption growth (23.8%) and government services growth (12.8%). Agriculture and industrial sector growth estimates are in line with our forecasts. CRISIL had estimated India’s GDP to grow at 6.9% in fiscal 2017.
In the wake of demonetisation, even if the situation limps back to business as usual by the end of fourth quarter, not all impacted sectors may be rebound equally. Sectors hitherto dealing in high-value cash transactions such as real estate (and thereby related sectors such as cement and other building products), and luxury automobiles, may take longer to revive compared with others.
The outlook for fiscal 2018 will be shaped by how long the cash crunch led disruption lasts. In our base case, we have taken it as a 2-quarter phenomenon- Q3 and Q4 and normalisation after that. In this scenario, growth will start approaching the 8% mark in the next fiscal if monsoons too remain normal.